Correlation Between Emerson Electric and African Agriculture
Can any of the company-specific risk be diversified away by investing in both Emerson Electric and African Agriculture at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Emerson Electric and African Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Electric and African Agriculture Holdings, you can compare the effects of market volatilities on Emerson Electric and African Agriculture and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Emerson Electric with a short position of African Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Electric and African Agriculture.
Diversification Opportunities for Emerson Electric and African Agriculture
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emerson and African is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Electric and African Agriculture Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Agriculture and Emerson Electric is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Emerson Electric are associated (or correlated) with African Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Agriculture has no effect on the direction of Emerson Electric i.e., Emerson Electric and African Agriculture go up and down completely randomly.
Pair Corralation between Emerson Electric and African Agriculture
If you would invest 12,963 in Emerson Electric on September 14, 2024 and sell it today you would earn a total of 153.00 from holding Emerson Electric or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Emerson Electric vs. African Agriculture Holdings
Performance |
| Timeline |
| Emerson Electric |
| African Agriculture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Emerson Electric and African Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Electric and African Agriculture
The main advantage of trading using opposite Emerson Electric and African Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Electric position performs unexpectedly, African Agriculture can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in African Agriculture will offset losses from the drop in African Agriculture's long position.| Emerson Electric vs. Dover | Emerson Electric vs. Parker Hannifin | Emerson Electric vs. Pentair PLC | Emerson Electric vs. Eaton PLC |
| African Agriculture vs. Emerson Electric | African Agriculture vs. Delta Air Lines | African Agriculture vs. Newpark Resources | African Agriculture vs. JetBlue Airways Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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